Won't somebody PLEASE think of the bankers!? If they don't have enough money they won't be able to pay the bonuses, without which they will lose all that marvelous talent that periodically wrecks the world financial system.

GAT_00:$120 billion in federal deposit insurance (through the FDIC, backed by the Treasury)

Oh yeah, that's a terrible, terrible thing to have.

The loan guarantee programs help alof of students and home buyers too.

What is the artificial rate spread? If it's the banks paying me 0.10% on saving and using my money to buy treasuries, then yeah......that interest income is a HUGE multiple of interest expense, so viola, free spread! But that is available to small banks too. Any fark economist/accountant on here can figure out that's free money.

The good part is that the government has a big buyer (lender) to keep funding their spending. The bad news is nobody can get a loan because who would make a risky loan when you have the guaranteed spread on treasuries vs. savings/cd rates?

GAT_00:$120 billion in federal deposit insurance (through the FDIC, backed by the Treasury)

Oh yeah, that's a terrible, terrible thing to have.

Just because you socialise the losses, doesn't mean you have to privatise the profits. FDIC was created to protect small savers from bank failures, not to line the pockets of banks with taxpayer's money.

If you claim that the FDIC is an unnecessary bank handout, I don't give a fark about the rest of your numbers. If that's their standard for a bad handout, I doubt any of the rest of them are anything bad.

Just because you socialise the losses, doesn't mean you have to privatise the profits. FDIC was created to protect small savers from bank failures, not to line the pockets of banks with taxpayer's money.

Point of information: the banks PAY an insurance premium for FDIC coverage. The losses referred to in the article are the cost of bank failures in excess of the premiums. It goes to make the depositors whole, not to profit anyone.

Bad_Seed:log_jammin: Please explain how the FDIC is lining the pockets of the banks.

Like this.

cchris_39: The losses referred to in the article are the cost of bank failures in excess of the premiums

If you want to argue that the premiums should be raised to the extent of losses, you have a legitimate point. But then I'd have to threadjack you to Obamacare, Social Security, Medicare, student loans, Fannie and Freddie, and every other federal insurance program that's in the red.

I'm not a real finance wonker but weren't some of those things stuff that don't actually "pay out"? LIke

$120 billion in federal deposit insurance (through the FDIC, backed by the Treasury)At least $100 billion in government-guaranteed loans, especially mortgages And a question about the second one - what does that actually mean? The banks loan the money and government simply guarantees it? How is that a subsidy if the loans don't fail (which quite obviously they have)?

First, we kill most of the lawyers. Some of the really nice ones, public defenders, the ones who get innocent guys off death row, some of the newish members of the ACLU - we'll let them slide for a while. We'll be too busy with the bankers.

log_jammin:Please explain how the FDIC is lining the pockets of the banks.

It could be argued that guaranteed deposits remove the incentive to scrutinize your bank's lending and borrowing practices in order to make sure that the bank will be responsible with your money. Large, unscrupulous banks get customers that they otherwise wouldn't be able to attract if they had to be more transparent about their inner workings. So not only do the banks get more money in the form of deposits, but nobody bothers to pay close attention to their dealings, allowing them to make riskier bets with their customers' money.

cchris_39:If you want to argue that the premiums should be raised to the extent of losses, you have a legitimate point. But then I'd have to threadjack you to Obamacare, Social Security, Medicare, student loans, Fannie and Freddie, and every other federal insurance program that's in the red.

It's more complicated than that. Social programs should be there to benefit the poor and middle class, not corporations and their shareholders. Obamacare, Medicare and student loans fail that test, at least in part, but that's probably due to lobbyists. Most liberals understand this and are pretty ambivalent about Obamacare, which they argue is better than nothing, or they hope that it's a stepping stone to a public option, or even (*gasp*) single payer.

But back to the topic, if this guy's analysis is right, then a market rate for FDIC would wipe out all of the banks' profits. No profits means, at a minimum, no bonuses and no rising stock prices. That would hurt rich people (slightly), and we can't have that, now can we?

DirkValentine:I'm not a real finance wonker but weren't some of those things stuff that don't actually "pay out"? LIke

$120 billion in federal deposit insurance (through the FDIC, backed by the Treasury)At least $100 billion in government-guaranteed loans, especially mortgages And a question about the second one - what does that actually mean? The banks loan the money and government simply guarantees it? How is that a subsidy if the loans don't fail (which quite obviously they have)?

cchris_39:Bad_Seed: log_jammin: Please explain how the FDIC is lining the pockets of the banks.

Like this.

cchris_39: The losses referred to in the article are the cost of bank failures in excess of the premiums

If you want to argue that the premiums should be raised to the extent of losses, you have a legitimate point. But then I'd have to threadjack you to Obamacare, Social Security, Medicare, student loans, Fannie and Freddie, and every other federal insurance program that's in the red.

And none of us want that.

Nobody cares about your gibberish. It's not even funny. "Threadjack" wherever you want, you won't change the opinion of anyone on Fark, because no one thinks you make any sense at all.

FDIC is paid through fees from the banks, so counting that money against banks as a "subsidy" is farking weird. While FDIC has the ability to borrow from the treasury if the fund ever run out (which would then lead to higher fees later to make up the shortfall), as far as I know it never has.

Given that failure with the first one I checked, it seems pointless to pursue the other items in the list, better to just assume it is just as ludicrously badly researched and not waste any more time.

GAT_00:$120 billion in federal deposit insurance (through the FDIC, backed by the Treasury)

Oh yeah, that's a terrible, terrible thing to have.

Well, during the collapse of the housing bubble, it turned out that the FDIC hadn't bothered to collect any premiums for a long time. Also, apparently the FDIC often ends up paying to keep the bank afloat when it is only supposed to cover the depositors. And it was never intended to cover investment banks at all. All of this amounts to subsidies to the banking industry that the FDIC was never supposed to provide.

Bad_Seed:log_jammin: Bad_Seed: What would happen if a private insurance company had to pay out more than its premiums can cover?

hell would be freezing over. But I'm still not sure how that means the FDIC isn't covering the average consumer with an account, and how an insolvent bank can have it's pockets lined from it.

The banks are pocketing the difference between the proper rate that they should pay for FDIC and the difference that they actually pay. That's the subsidy.

Not to mention that the rate banks pay is so low that the FDIC only ever has a little over 1% capital to cover the over $5 trillion worth of insured deposits. In 2009, during the financial collapse, the FDIC actually went insolvent, and had to use the next three future YEARS of premiums to cover the payouts. In the event of any real collapse, in which the FDIC wouldn't be able to use upcoming years to cover its lack of funds, the US taxpayer would almost certainly be left holding the bill for the banks.

GAT_00:$120 billion in federal deposit insurance (through the FDIC, backed by the Treasury)

Oh yeah, that's a terrible, terrible thing to have.

So what?

That's a good thing, for sure. That doesn't disqualify it from being a subsidy. If you're making a list, you put that in there for completeness. The FDIC coverage is a great subsidy our government should extend across the banking sector as the kind of social good only government can realistically invest in.

Now how about the rest?

They've already bent the world economy over a pinball table, they're raking in mountains of cash, we ostensibly have a capitalist system... Why not split the big financial institutions up, pull their OTHER subsidies and make them compete like an actual goddamn market for the first time in a long time?